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Ecommerce Questions.

I have planned to start with eCommerce as I feel its quite lucrative. I have done some research and will be targeting few specific niches. But I have few basic questions that I am seeking an answer for.

1. I live in India. But I am targeting US customers. What will be the legal & tax matters that I will have to go through??

2. I will use dropshipping cos I cannot stock items. I have heard worldwide brands are the best. What is your take?? any other dropshipper that is reliable and fast??

3. Are you with any dropshipper right now?? I wanted to know that price of an item that I am selling and would like to know what are the prices with each dropshippers. Since most dropshippers ask for fees before joining, i am unable to know the price of items.

3. Are you with any dropshipper right now?? I wanted to know that price of an item that I am selling and would like to know what are the prices with each dropshippers. Since most dropshippers ask for fees before joining, i am unable to know the price of items.

I don't think I'd work with a drop shipper that wanted me to pay a fee before they would give me pricing.

First off, I agree with everything in Will's post, so I won't bother to repeat it.

I've used a number of drop shippers in the past and to be honest, it's a mixed bag. From the same distributor, one order can be shipped out the same day, another can be delayed weeks for no apparent reason. When I first started (circa 2000), I used B&F (aka Maxam), but they're one of the most prolific drop shippers out there and it's hard to make a profit. ABC/LTD Commodities is another popular one but with the same problems. There are a few other general merchandise distributors out there, but I can't think of them off the top of my head. I'm sure other NetBuilders will come to the rescue of my flagging memory.

It's hard to find drop-shippers on Alibaba & Global Sources since both sites are primarily an avenue to connect direct bulk buyers and Asiaan sellers. And be careful - I've been burned a couple of times on Alibaba to the tune of $2,000.

I think the *real* key to finding the best distributor/drop shipper is to find your niche products. What kind of merchandise do you want to sell? What kind of products are hot right now? What products interest you? Once you find a few prospects, research the brand names (if any) that are popular in that niche. Contact the manufacturers to find their distributors and then find out if they drop ship. I think you would be better served with that approach than to find a drop shipper first and just sell what they offer.

The other question you need to answer is how will you actually sell the products? Are you going to sell on eBay or Amazon? Will you set up a shopping cart and handle the sales yourself?

Promotion is another thing. How will you drive traffic and then convert that traffic? If you're using eBay or Amazon, there's little promotion you can or need to do since they already have a ton of traffic. But you need to look carefully at your competition and find out if you can be profitable. If you're not going one of those routes, how are you going to advertise? Organic SEO? That's tough with 1,000s of products. AdWords or some other PPC? That can get expensive *really* quick, although it can also be quite lucrative. In the last 4 years, I've made about $150,000 from an ad that's cost me $20,000 (although that was not a drop-ship product).

Regarding markup on the 'net, it SUCKS. I've worked in retail here in the States as well as running my own custom electronics company. In those environments, some products fetch up to 100% markup. But because it's *SO* much easier to set up a web store, tons of people who don't understand the value of the products they sell are content to make $100 on a $2,000 product.

Don't plan on being the cheapest out there - there's always someone who will be willing to sell it for less and everyone ends up losing. And I know how attractive it is to try to be $1 cheaper than the next guy. But eventually you'll get to the point where it's not worth selling the product anymore and the market it ruined. And even if you and your competition don't ruin the market, it's incredibly hard to take a somewhat successful business based on the lowest price and RAISE the prices to be more successful.

I beg you, don't be one of the 10,000 idiots out there who undersell a product just because they think they'll sell more by being $500 cheaper than the next guy. If you're going to do this, plan to be around long-term for your prosperity and your customer's satisfaction. You can't last long making no money. I can't tell you how often I've seen an item that regularly sells with $1,000 profit, being sold with $100 by some kid in his parent's basement because $100 seems like a lot of money to him. And I have nothing against kids who are working from their parent's basements. If you are, be a SMART kid there. (And no, this is NOT a sore point for me AT ALL!)

For real numbers, though, expect about 15 - 20% markup on your products before shipping and fees. You can make up some of the fees in shipping, but don't gouge people - most people can spot outrageous shipping prices pretty quickly. Accessories of any sort tend to have a fair amount of markup in the retail environment and therefor retain a few points more on the net. You might get lucky and find a niche where products are selling for 30-40%, but I wouldn't expect more than that online.

The product that I am selling is in the home cleaning niche. and I have found its not that much competitive. I am planning to sell my products through my own webstore and the number of items will be around 50-60.

@ Brad.
You told about contacting the distributor of the products. But even if they allow dropshipping, the main problem will be to convince them to dropship for me. Why would they dropship for me when my site is new with low traffic? They may not trust me.
And thanks for explaining the pricing matters. this would be my first ecommerce store and your tips have greatly helped me.

The product that I am selling is in the home cleaning niche. and I have found its not that much competitive. I am planning to sell my products through my own webstore and the number of items will be around 50-60.

Are you planning on using a hosting service with an off-the-shelf shopping cart, or building your own site? If the latter, which software are you using? I'm launching a new store soon running on Joomla!/VirtueMart and can highly recommend it.

Originally Posted by rome9t9

You told about contacting the distributor of the products. But even if they allow dropshipping, the main problem will be to convince them to dropship for me. Why would they dropship for me when my site is new with low traffic? They may not trust me.
And thanks for explaining the pricing matters. this would be my first ecommerce store and your tips have greatly helped me.

I've yet to come across a distributor that doesn't want as many people peddling their products as they can get. As Will mentioned, they may have restrictions on non-US resellers, but make sure to point out you're shipping only in the US. As long as you pay for the product, I doubt there will be an issue.

I've done both dropshipping in the past as well as stocking products which I now do as I prefer to be in control of everything and the site I sell at doesn't allow dropshipping. Stocking products helps because the products are coming from the same country and there are no holdups with the supplier.

1. I live in India. But I am targeting US customers. What will be the legal & tax matters that I will have to go through??

I'm not too sure about this - I just put it as a part of income for my other company.

2. I will use dropshipping cos I cannot stock items. I have heard worldwide brands are the best. What is your take?? any other dropshipper that is reliable and fast??

Finding a good dropshipper can be very difficult. It really depends on what sort of product you intend on selling. When I was dropshipping I got the company to send me some products to just see what shipping times are like.

3. Are you with any dropshipper right now?? I wanted to know that price of an item that I am selling and would like to know what are the prices with each dropshippers. Since most dropshippers ask for fees before joining, i am unable to know the price of items.

I've joined dropshipper directories before and have found they have never really helped me. Maybe it was the niches I was looking for butn I found them to be a waste of money. Google helped me the most.

As I said before I prefer stocking products but since you are in India that might be difficult for you. Find a dropshipper that you like, trust and has good reviews on other websites and it should go well for you.